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Why IPG Photonics Corporation Shares Went Dark Today

Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of IPG Photonics Corporation(NASDAQ:IPGP) finished the trading day on Tuesday with close to a 6% loss after dropping to a 10% loss early in the morning. Investors seem unhappy with the fact that IPG's upcoming quarter is looking a little soft, despite the fact that the company bested top-line expectations for its fiscal first quarter.

So what: IPG's first-quarter revenue came in at $170.6 million, a 20% year-over-year improvement that also cleared analyst expectations of $168.1 million in revenue. The company's bottom line showed $0.77 in earnings per share, which matched analyst expectations. Looking ahead, IPG now expects to generate between $173 million and $188 million in revenue for the second quarter, which will result in a range of $0.77-$0.92 in EPS. Analysts had modeled a second quarter with $187.1 million in revenue and $0.90 in EPS, so the midpoints of IPG's guidance -- $180.2 million in revenue and $0.85 in EPS -- fall beneath those estimates on both counts.

Now what: It's hard to call this bad guidance, as it IPG's midpoints would represent year-over-year growth of 7% on the top line and 6% on the bottom line. However, this is not particularly strong growth for a company that just posted a year-over-year growth rate of 20% in revenue and 15% in EPS. Slowing growth is always a concern, particularly for a company that's seen its share prices rise primarily on P/E expansion over the past year. Tread cautiously with IPG. It's not a screaming buy today, but it's hardly in the nosebleed-P/E territory it once occupied, either.

Author

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.